Nowthen council reviews draft 2026 budget, debates using fund balance and 5% merit proposal

Financial consultant Lori Jagger presented the Nowthen City Council with a draft 2026 budget on July 23, outlining staffing, capital and debt assumptions and proposing the use of some fund balance to smooth tax impacts.

"Included in your packet tonight was a lot of summary preparations for the 2026 budget," Jagger told the council, explaining that staff used the capital improvement plan and an equipment-replacement schedule along with 2023 nd 2024 historical data and 2025 year-to-date expenditures to build the proposal. She said the package envisions continuing to use $50,000 from gambling proceeds to help offset sheriff costs and currently assumes about $102,000 of fund balance will pay for operations in 2026.

The presentation called for a 5% merit pool for employees and noted a projected 10% rise in health-insurance costs. Jagger also shared a spreadsheet-format view that maps department expenditures to property-tax levy impacts and, at council request, confirmed she would add bond maturity dates and remaining principal to the packet.

Why it matters: Council members said the council needs to balance retention pressures and long-term fiscal sustainability. Several members said using saved funds to avoid short-term levy spikes can be sensible, but others pressed to avoid drawing fund balance too low.

"I'd rather be on the high end, the higher end than the lower end for sure," Council Member Glazer said when members discussed a target fund-balance range, while other council members suggested a 40—0% target and asked staff to model those scenarios.

Levy and revenue cautions: Jagger warned the council not to over-rely on intergovernmental revenue after reporting that transportation-related aid came in well below prior assumptions. "We had budgeted I think 90-some thousand in 2025 and we're only getting 44," she said, adding that the state-site projections now show an increase for 2026 but that such aid can be changed by the legislature.

Roads and capital planning: Council members pressed for a longer-term road-maintenance projection. Some said the 2024 road study lacked the detail the city needs to plan 10—5-year maintenance and avoid higher costs from deferred overlays. Staff said the city engineer and public-works staff could prepare a multi-year plan tied into the CIP and equipment-replacement schedule.

Public safety and equipment timing: Fire Chief Miller reviewed the fire department request for added training, medicals and maintenance tied to increased training activity and described a $20,000 one-time heavy-rescue equipment request. "I would expect that we're going to have some maintenance of our equipment that comes along with that," Chief Miller said. Council discussed whether unspent 2025 department funds could be used to accelerate purchases this year and whether to wait until year-end to confirm available balances.

Other items: Staff reported modest changes in planning, elections and legal-cost projections, discussed shifting some public-works salaries into parks to reflect duties, and reviewed recycling and farmers-market finances. Recycling revenues are market-driven and county reimbursements will be clarified; staff is compiling user data to seek additional grant or reimbursement support.

Votes and next steps: The council approved the evening genda and a motion to approve claims for payment by voice vote earlier in the meeting. No budget adoption vote occurred; council directed staff to return with additional detail on interest rates and bond maturities, peer-city compensation data and refined line-item projections. Members agreed to cancel an Aug. 6 workshop and meet on Aug. 20 to focus on the general fund, with Sept. 3 as a back-up date for other funds.

The council will continue detailed budget review in forthcoming workshops before setting final levy and budget figures.